New analysis reveals that £1.75 billion was wiped off UK council pension funds due to their oil investments crashing over the past three years.

Platform London commissioned Transition Economics to conduct the analysis [1], which showed that

* The combined investments by 56 local government pension funds into nine leading oil companies, including BP and Royal Dutch Shell, collapsed by half from £3.6bn to £1.8bn between April 2017 and November 2020. 

* The largest losers were pension funds from Greater Manchester (£375m), West Yorkshire (£211m) and Nottinghamshire (£81m). All three funds have spoken publicly against reducing direct holdings.[2]

* For Greater Manchester Pension Fund, this wiped out 2.2% of the total fund value, equivalent to over £1,000 per pension member. West Yorkshire lost £740 per member, and Nottinghamshire £1,070.

Robert Noyes, a campaigner at Platform, said 

“It is well past time for pension funds to drop oil & gas stocks, both for the climate and their future valuation. Funds like Greater Manchester, West Yorkshire and Nottinghamshire lost billions by sticking with BP and Shell. They should have listened to divest campaigners. Instead, the burden is being dumped on the public, pensioners and the Global South.” 

Platform London is releasing this report in a context where three quarters of local councils have now declared a climate emergency. However, only a minority of council-run pension funds have pledged to divest their investments from fossil fuel holdings.  

The 10 council pension funds that lost the largest amounts were:

  1. Greater Manchester – £375 million
  2. West Yorkshire – £211 million
  3. Nottinghamshire – £81 million
  4. East Riding – £81 million
  5. West Midlands – £80 million
  6. Teesside – £73 million
  7. Hampshire – £68 million
  8. Derbyshire County Council – £65 million
  9. Surrey County Council – £61 million
  10. Kent County Council – £52 million

Robert Noyes added

“The oil and gas industry has no credible plan for the imminent future where electric vehicles are cheaper than fossil cars and where countries put limits on oil and gas extraction. If councils are sincere about tackling the climate emergency, their pension funds need to invest in the future, not the past, and divest from stranded oil and gas stocks.”

10 largest losers by percentage value of the total pension fund

  1. Greater Manchester – 2.2%
  2. London Borough of Bexley – 2.1%
  3. Teesside – 1.9%
  4. Isle of Wight Council – 1.9%
  5. East Riding – 1.8%
  6. Nottinghamshire – 1.7%
  7. London Borough of Merton – 1.7%
  8. Falkirk Council – 1.7%
  9. Surrey County Council – 1.6%
  10. Dumfries & Galloway – 1.6%

Notes:

Media contact: robert@playformlondon.org

[1] The full Transition Economics report and methodology. This includes losses for all 56 pension funds.

http://transitioneconomics.net/wp-content/uploads/2020/11/TransitionEconomics_Local-Gov-Pension-losses-from-oil-investments.pdf

The analysis examined all UK local government pension funds, but excluded divesting pension funds and those with insufficient data on direct oil investments.

Dividends from fossil fuel companies have historically provided an important income stream for pension funds, but payouts have been cut this year as producers have struggled with reduced demand. This trend is expected to continue, with the rapid expansion of electric vehicles.

[2] 

In early 2020, Reuters reported Greater Manchester and West Yorkshire funds as claiming they gained £400m and £160m respectively over 3 years to 2019, by not divesting from fossil fuels. The losses identified by Transition Economics on only the nine top oil companies eradicate this gain almost entirely in Manchester’s case, and entirely in West Yorkshire’s case.

https://www.reuters.com/article/us-britain-pensions-divestment-idUSKBN1ZJ1EK